APRIL 18, 2019
Prices whipsawed traders this week, falling to their lowest level in weeks before rebounding to the upper end of the recent trading range Wednesday. May futures fell back some on Thursday to end the holiday shortened week at 77.31 cents per pound, down 80 points for the week.

July futures, which now have the highest open interest, finished at 78.27 cents, down 59 points from last Friday. Trading volume was high during Monday’s collapse but slower after that.

May options expired last Friday, which helped open interest continue recent declines. Total open interest fell 3,967 contracts to 212,509 and is at its lowest since late December.

BENEFICIAL RAINS IN THE SOUTHWEST

The past weekend’s rains were a boost to Southwest crop prospects. Oklahoma cotton territory and a large share of the West Texas growing region received one to three inches of rain. Areas west and north of Lubbock were less fortunate, but there are more rains in the forecast.

One more good planting rain could provide a much better soil moisture profile than some districts have seen in the past few years. Over in the Delta states, conditions remain excessively wet, putting the South Delta region behind its average planting pace. Unfortunately, there is more rain in the forecast for the Mid-South, which may delay the average planting date this year.

THE ECONOMY

Economic news was excellent this week. U.S. data was surprisingly positive on several fronts. Jobless claims, retail sales, and international trade figures all beat analysts’ expectations. China’s economic data also was good as the initial estimate of first quarter GDP came in at 6.4 percent growth.

Even better, a private measure of China’s textile manufacturing activity this week showed a rebound from the worst reading in years in February to the best reading in years in March. The Chinese government has dramatically ratcheted up stimulus efforts over the past several months, and the efforts seem to be taking hold.

EXPORT SALES AND SHIPMENTS

Chinese demand was evident in the past few weeks’ export sales reports, but China was only a minor buyer in the most recent week. Net new sales were still strong at 217,600 bales of Upland and 14,300 bales of Pima.

Shipments totaled 351,500 bales of Upland and Pima combined, which was a bit under the average necessary to hit the current USDA export target. Shipping needs to average just under 400,000 bales per week for exports to reach 15.0 million statistical bales by the end of the marketing year on July 31.

TRADE TALKS

U.S.-China trade deal negotiations continue to drag on, but both sides are signaling material progress. There seem to be more meetings in the schedule even as the U.S. won another WTO decision against China’s import quota administration for grains. Rumors have been so plentiful and details so sparse that most of the market has become numb (or perhaps inoculated) to the headlines.

On the bright side, it seems more and more likely that a “real” deal will happen. Unfortunately, no one but the key negotiators knows what a “real” deal means. As the dropping open interest attests, few speculators are willing to put on additional positions without more clarity.

CROP PROSPECTS

An increasing share of attention is falling to new crop prospects. Soil moisture maps, precipitation forecasts, and ground temperature are taking center stage as prep work and planting begin. In the week ahead, the Weekly Crop Progress and Condition report, which now includes cotton, will be released Monday at 3:00 p.m. Central Time.

Beyond that, traders will continue to watch the Export Sales report for readings on U.S. export shipments and demand. And, although it hardly needs saying, the entire market will be constantly scanning for any meaningful details of a U.S.-China trade accord.